MANAGING GENERAL AGENT'S AGREEMENT

1.

This Agreement contains the entire agreement of the Insurer and the MGA.

2.

This Agreement will not become effective until signed by the Insurer and the MGA and is filed with and approved by the Commissioner of Insurance of the State of Alabama.

1.

Lines of Insurance . The MGA is hereby authorized to accept, bind, issue, and process endorsements, on forms approved by the Insurer, applications, binders and/or policies (the “ Policies ”) written by or through sub-producers (as defined below) for classes of insurance described as private passenger automobile insurance policies, in accordance with the Insurer’s underwriting procedure manuals and guidelines.

2.

Limits and Restrictions . The Policies shall have the policy limits and be subject to the other terms and restrictions (including, without limitation, limits on claims settlements) set forth in Exhibit A to this Agreement.

3.

Territory . The MGA shall be authorized to write the Policies in the jurisdictions set forth in Exhibit A.

4.

Exclusivity . The MGA shall have the authority to continue servicing insurance policies that it solicited on behalf of insurance companies other than the Insurer prior to the Effective Date. Otherwise, after the Effective Date, the MGA shall not solicit or service private passenger automobile policies for any insurance company other than the Insurer, without the prior written consent of the Insurer, which shall not be unreasonably withheld.

1.

Solicitation . To solicit Policies of private passenger automobile insurance that, in their pricing and insurability, meet or exceed the underwriting and pricing standards established by the Insurer from time to time and conveyed to the MGA in writing.

2.

Servicing Business . To direct and implement the production, underwriting, premium collection, accounting, statistical and other work necessary or incidental to the insurance business written under this Agreement; and to provide for all usual and customary services to independent sub-producers, insureds and policyholders, including, without limitation, delivery of policies, return of premiums due insureds or policyholders in MGA’s possession, premium audits on policies, timely and, appropriate responses to inquiries and complaints from sub-producers, insureds, policyholders or members of the public, and comply with any reasonable service standards as may be set forth in writing by the Insurer and delivered to the MGA from time to time.

3.

Competent Staff . To maintain sufficient supplies and equipment and a staff of competent and trained personnel, to produce, develop, underwrite and supervise the business covered by this Agreement.

4.

Premium Rates . To quote accurate premiums and rates for the Policies in compliance with applicable rating manuals or written rating plans provided by the Insurer to the MGA, or such plans developed by the MGA and approved by the Insurer, in all instances in compliance with applicable state laws and regulations.

5.

Policy Forms . To develop, formulate and file on behalf of the Insurer policy forms, rates and rules, and all other reports and filings, as may be required by the regulatory authorities. The MGA shall receive written approval from the Insurer before making any such filing, and the Insurer shall respond to any request for such approval within fifteen days of receipt of request.

6.

Compliance with Manuals . To comply fully, timely and promptly with all manuals, rules, regulations, guidelines, instructions and directions issued by the Insurer relating to the Policies.

7.

Binding of Risks . To bind risks only in accordance with the terms of Exhibit A and any other underwriting and pricing standards from time to time established by the Insurer in writing and provided to the MGA, to report all risks bound in accordance with the terms of Exhibit A , and to forward to the Insurer for acceptance all other risks.

8.

Policy Issuance . To timely and properly issue, deliver and execute or countersign Policies, including endorsements, binders and related documents, on forms approved by the Insurer and required regulatory authorities.

9.

Policy Cancellation . To cancel or non-renew Policies for cause in accordance with their terms and in compliance with this Agreement, subject to the requirements imposed by law, and file the required related reports with appropriate insurance regulatory authorities; provided, however, that this shall not preclude the MGA from exercising its discretion to cancel or non-renew any Policy so long as the MGA acts in compliance in all respects with the terms of the Policy and all applicable laws and guidelines of the Insurer. The Insurer shall have the right to cancel or not renew any policy of insurance subject to the applicable laws and regulations concerning the cancellation and non-renewal of insurance policies.

10.

Sub-Producers . To accept Policies on behalf of the Insurer written by properly licensed and qualified, professional insurance agents, solicitors and brokers (“ sub-producers ”), and to direct, supervise and coordinate the efforts of sub-producers. The MGA shall be solely responsible for payment of all commissions earned by sub-producers. The MGA shall accept Policies only from sub-producers who have agreed in advance and in writing to return unearned commissions on cancelled Policies and to the statutory waiver contained in Article XV of this Agreement.

11.

Sub-Producers Errors and Omissions . To maintain valid evidence of each sub-producer’s professional errors and omissions coverage (a policy or certificate of insurance) that covers all activities contemplated herein and specifically includes coverage for violations of Unfair Trade Practices Acts and bad faith, in an amount not less than $300,000 with a deductible not greater than $5,000.

12.

Premiums . To charge, collect, receive and receipt all premiums, including premium surcharges, fire district and other taxes or assessments levied by any jurisdiction and required to be collected in addition to stated premiums, due on all Policies bound or written under this Agreement, and pay the Insurer in accordance with Section III.14.

13.

Credit Extensions . To maintain the following procedure for handling uncollected premium balances on insureds’ accounts: after the premium has been billed and is due from the insured for more than seventy days, the MGA shall systematically waive the balance due premium off of the insured’s account, thus reducing the balance due to zero. The MGA shall have no responsibility for these waived balances unless they result from a processing delay or system error caused by the MGA. For computation of provisional commissions described in Exhibit A , premium chargeoffs or waivers will be considered as a reduction of premium. However for reporting purposes, the premium shall be reported gross of any waived balances. The MGA shall be responsible for any and all bad debts that may occur in dealing with the retail agents (such as non-sufficient funds activity).

14.

Accounting . To timely account for the Policies as follows:

a.

Establish and maintain true, accurate and complete books, records and accounts of all transactions arising under this Agreement in accordance with all applicable laws and with the directions and requests of the Insurer. The Insurer will have access to and the right to copy all such books, records and accounts at all times.

b.

Collect, compile and timely transmit to the appropriate reporting agencies all statistical, underwriting and claims data and information, including, but not limited to, premium and loss information in a format and at such frequency as may be determined by the respective reporting agency and the Insurer. This data and information shall be furnished to the Insurer in an electronically transmittable format determined by the Insurer at no extra charge to the Insurer. The Insurer may assume the duties of reporting statistical data at its discretion.

c.

Provide the Insurer with a monthly accounting (a “ bordereau ”) detailing all transactions and insurance written under the Policies, including, but not limited to, (i) gross written premium, (ii) net written premium, (iii) Policies issued or bound by insured including location, limits and effective date, (iv) Policies

canceled, (v) premium adjustments due to endorsements, audits or otherwise, (vi) commissions payable to or retained by MGA, (vii) net balance due, (viii) premium surcharges, fire district and other taxes or assessments levied by any jurisdiction, and (ix) deposits (escrow funds) by Policy.

d.

Pay to the Insurer balances due (including deposits (escrow fund) within thirty days of the end of each calendar month for which the bordereau is transmitted. The omission from any statement or bordereau of any item due to the Insurer shall in no way modify or otherwise affect the responsibility of the MGA to account for and pay the Insurer any and all premiums, net of commission, or any other monies due the Insurer, nor shall the omissions prejudice the right of the Insurer to collect any and all sums to which it is entitled.

e.

The MGA shall handle balances due from the insured as described in Section III.13. The MGA shall continue to be responsible for any balances collected from the insureds by the sub-producers.

15.

Fiduciary Capacity – Premium Trust Funds . To act as fiduciary for the Insurer and to hold all premiums and any other amounts collected and received on Policies for the Insurer in a fiduciary account separate and apart from all non-premium trust funds of the MGA or others in a bank which is a member of the Federal Reserve System and insured by the Federal Deposit Insurance Corporation and which is approved in writing by the Insurer. The bank account shall be designated by the MGA in such a manner as to establish clearly that the MGA is holding and acting as trustee for the Insurer with respect to the funds in the account. The account shall be designated “Premium Fund Trust Account – [name of Insurer]” on bank records, and shall only be used for transactions involving the Insurer. No other insurance companies’ premium funds may be intermingled in this account except for transmittals received from retail agents that may have multiple MGA carriers listed on it. Interest or other income, if any, accruing on these premium trust funds may be retained by the MGA for its own account so long as the MGA is current in all accounts with the Insurer. The trust funds so held may be used by the MGA as necessary to return and refund premiums, net of return commissions, to policyholders or their authorized representatives. The account shall be subject to periodic audits performed by the Insurer at its election. If the MGA fails to pay the Insurer any premiums or monies when due, or fails to comply with applicable premium trust fund laws and regulations, such failure shall constitute a breach of and default under this Agreement.

16.

Insurer Property; Confidentiality . To promote and safeguard at all times as a fiduciary the best interests and good name of the Insurer and to safeguard, maintain and account for all Policies, forms, manuals, information, equipment, supplies or anything else furnished by the Insurer, all of which shall remain the property of the Insurer. The MGA shall return all of the Insurer’s property to the Insurer promptly upon demand. The materials or information furnished by the Insurer to the MGA may contain proprietary or confidential information of the Insurer, and the MGA shall not disclose such proprietary or confidential information to any other person, or use such information other than as set forth in this Agreement, without the express written consent of the Insurer’s CEO or Board of Directors.

17.

MGA Expenses . To pay, to assume the obligation for and to be fully responsible for all costs and expenses associated with the MGA’s performance under this Agreement

(unless resulting specifically from written guidance of the Insurer), including, without limitation, sub-producer commissions, loss control reports, premium audits, regulatory examinations and related fees, fines and settlement costs, policy and policy jacket printing, motor vehicle reports, travel expenses, employee compensation, countersignature fees and expenses, postage, advertising and license fees. The Insurer shall be responsible only for its own costs and expenses, unless otherwise agreed by the Insurer, and the Insurer shall be responsible for all assigned risk, buy-out costs and any guaranty fund assessments levied by any state or regulatory body. In the event the Insurer is required to pay any costs or expenses that are the responsibility of the MGA, the MGA shall promptly reimburse the Insurer for its payments. Notwithstanding any of the foregoing, the MGA shall be responsible for state insurance department examination fees and costs only in the states to which this Agreement applies and only up to a maximum of $30,000 per examination, unless the examination results in fines causing total fees and costs to exceed $30,000, in which event the MGA shall pay any additional amounts that the report states are the direct result of the MGA’s operations.

18.

Licenses . To maintain and provide the Insurer with copies of all licenses and permits required by the MGA for the proper conduct of MGA’s duties under this Agreement. The MGA shall not transact any business in any jurisdiction covered under this Agreement unless and until the MGA has obtained all required licenses and permits and is properly appointed to represent the Insurer in such jurisdiction.

19.

Legal Compliance . To keep fully informed of and comply with all applicable laws and regulations, including, without limitation, all laws and regulations applicable to insurance producers in the jurisdictions where the Policies are issued. The MGA shall not solicit or bind any risks in any jurisdiction until all applicable laws, regulations and ISA/NCCI or other bureau rules have been complied with.

20.

Governmental Contacts . To notify the Insurer promptly of all correspondence and other communications from and contacts with insurance regulatory or other governmental authorities relating to the insurance and activities that are the subject of this Agreement; to forward to the Insurer promptly upon the MGA’s receipt all summonses, complaints, subpoenas or other court documents relating to the insurance and activities that are the subject of this Agreement; and to cooperate fully with the Insurer in making any responses. The MGA shall have no authority to represent the Insurer in regulatory matters and shall not respond to any governmental action except as the Insurer may direct or as required by law. Responses to department of insurance complaints shall be handled as agreed to in writing by MGA and the Insurer to assure prompt response.

21.

Premium Financing . To use premium financing through unaffiliated licensed premium finance companies on the Policies. Notwithstanding paragraph 13 above, the MGA shall remit one hundred percent of the financed premium to the Insurer, and in no event shall the MGA hold any such financed premiums longer than allowed by Section III.14 above. The MGA shall provide all services related to premium financing, including, without limitation, promptly and appropriately responding to all correspondence and notices related to such premium financing, and ensuring compliance with all applicable consumer protection laws, regulations or rules (such as the Truth-in-Lending Act and any applicable state premium finance laws). The MGA shall ensure that all applicable refunds of premium due to premium finance companies shall be made, and the MGA shall be liable for and hold harmless and indemnify the Insurer against any such amounts

improperly paid to the insured, or for refunds not made to the insured or to the premium financed company in accordance with the appropriate governing law.

22.

Insurer Interface . To interface at all times with the Insurer or its designated affiliates through electronic data processing hardware and software, networks and communication lines and other means as specified in writing and in advanced by the Insurer.

23.

Copies of Policies . To maintain in each insured’s files (either in hard copy or electronically) all Policies, endorsements, rating worksheets and related documents, Policy cancellations and other terminations processed by the MGA.

24.

Accurate Records . To keep and maintain during the term of, and for a period of seven years after termination of, this Agreement separate, identifiable, orderly, accurate, complete and timely records and accounts of all business and transactions pertaining to Policies bound or written under this Agreement, including, without limitation, complete underwriting, rate and claims files. Such records and files shall be the property of the Insurer, however, the MGA shall be entitled to retain a copy of said records and files. Upon request by the Insurer or any insurance regulator having jurisdiction over the Insurer, all records and reports maintained pursuant to this Agreement shall be provided as hard copies or in electronic format usable by the Insurer or such regulator.

25.

Audit . To permit the Insurer and its authorized representatives (including, without limitation, any insurance regulator having jurisdiction over the Insurer), during the term of this Agreement and for a period of seven years after termination of this Agreement, to visit, inspect, examine, audit, verify and copy the properties, accounts, premium trust funds, files, documents books, reports, work papers and other records belonging to or in the control of the MGA or of any other person relating to the business covered by this Agreement; provided that such activities shall be conducted at the MGA’s offices, during the MGA’s normal business hours and upon not less than two business days’ notice from the Insurer; and provided further that the Insurer shall have the right to conduct such activities at any time or times in its sole discretion. The MGA shall also submit to any independent financial examination in such format as may be requested by any insurance regulator having jurisdiction over the Insurer.

26.

Financial Statements . To furnish the Insurer with an audited balance sheet, income statement and statement of cash flows as of and for each fiscal year ending December 31, not later than the following April 15, in each case accompanied by the written opinion (containing no qualifications) of a certified public accountant, where such accountant is reasonably acceptable to the Insurer.

27.

Prohibited Actions . The MGA shall have no authority to do any of the following:

a.

Bind any reinsurance or retrocession on behalf of the Insurer (including, without limitation, facultative treaty reinsurance), or commit the Insurer to participate in insurance or reinsurance pools or syndicates.

b.

Appoint any sub-producer without reasonable assurance that such sub-producer is lawfully licensed to transact the insurance business for which such sub-producer is being appointed.

c.

Collect any payment from a reinsurer or commit the Insurer to any claim settlement with a reinsurer, without prior approval of the Insurer. If prior approval is granted, the MGA must promptly forward a report of such transaction to the Insurer.

d.

Permit any of the sub-producers to serve on the Insurer’s Board of Directors; nor shall the Company appoint to its board of directors an officer, director, employee, sub-producer or controlling shareholder of its managing general agents. This subsection shall not apply to relationships that are governed by an applicable insurance holding company act or producer controlled insurer act.

e.

Jointly employ an individual who is employed by the Insurer.

f.

Appoint a subordinate MGA or program administrator.

g.

Extend any binding authority to any sub-producer, except for authority that is granted under producer agreements executed with retail agents as follows:

(i)

provide quotes, bind coverage as specified by the MGA, solicit and accept applications for the Policies;

(ii)

countersign and deliver Policies, endorsements, certificates and binders;

(iii)

collect, receive and record receipt for premium;

(iv)

provide such usual and customary services of an insurance agent on all contracts of insurance as requested by the MGA.

h.

Without prior approval of the Insurer, pay or commit the Insurer to pay, a claim over a specified amount, net of reinsurance, that shall not exceed one percent of the Insurer’s policyholder surplus as of December 31 of the last completed calendar year.

1.

The MGA shall give timely notice to the Insurer of any claim or loss with respect to the Policies and shall cooperate fully with the Insurer to, on a timely basis, facilitate the investigation, adjustment, settlement and payment of each and all claims and losses, and assign each claim or loss for handling as may be directed in writing by the Insurer.

2.

The MGA shall assist the Insurer in the collection of deductibles due, salvage and subrogation.

3.

The MGA shall give immediate notice to the Insurer of any claim or suit in which the Insurer or any of its affiliates is named as a defendant, in which event the Insurer shall have the right to assume sole and full control of the defense of such claim or suit.

4.

The MGA shall not be reimbursed by the Insurer for the salaries, office expenses or any other expenses incurred in the handling of claims unless otherwise expressly agreed to in writing by the Insurer.

5.

The MGA shall send the Insurer a copy of the claim file anytime at the Insurer’s request and as soon as it becomes known that the claim:

a.

has the potential to exceed the lesser of (i) such amount as may be determined by the insurance regulator of the jurisdiction where the risk is located, or (ii) such other amount as the Insurer may determine from time to time;

b.

involves a coverage dispute;

c.

may exceed the MGA’s settlement authority as outlined in Exhibit A;

d.

is open for more than six months;

e.

is closed by payment of the lesser of (i) such amount as may be determined by the insurance regulator of the jurisdiction where the risk is located, or (ii) such other amount as the Insurer may determine from time to time.

6.

Any claims settlement authority granted to the MGA pursuant to Exhibit A may be changed or terminated for cause upon the Insurer’s written notice to the MGA. The claims settlement authority granted to MGA may be terminated without cause at the Insurer’s sole discretion upon 180 days written notice to the MGA or upon termination of this Agreement. If the termination is for cause, the Insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination. Nothing in this paragraph is intended to relieve the MGA or the Insurer of any other contractual obligation.

1.

Review all statistical filings and underwriting data applying to the Policies written under this agreement, provided that the MGA furnishes all required information and data in a timely manner so as to enable the Insurer to meet all time requirements. The Insurer may assume the duties of reporting statistical data at its discretion.

2.

Pay to the MGA the commissions and fees to which it is entitled upon the MGA’s monthly rendering of its account statement to the Insurer, beginning at the end of the month in which this Agreement becomes effective. The MGA is allowed to take commission withdrawals throughout the month if the payment is not in excess of the actual commission due.

3.

Conduct, at least semi-annually and as often as the Insurer deems prudent, upon reasonable notice and during normal business hours, an onsite audit of the books, records and accounts of the MGA, including, without limitation, those in the underwriting, claims and policyholder operations, using either its own employees or independent outside auditors.

4.

Observe and comply with all applicable laws, regulations and rulings by any governmental authority, agency, bureau or commission having jurisdiction over the conduct of the business under this Agreement.

1.

The Insurer hereby represents and warrants that the transactions contemplated by this Agreement (i) are within the corporate powers of the Insurer, (ii) have been duly authorized by all necessary corporate action of the Insurer, (iii) constitute the legal, valid and binding obligation of the Insurer, enforceable against it in accordance with its terms, and (iv) do not conflict with, result in a breach of any of the provisions of, or constitute a default under the provisions of any law, regulation, licensing requirement, charter provision, by-law or other instrument applicable to the Insurer or its employees or to which the Insurer is a party or may be bound.

2.

The MGA hereby represents and warrants that:

a.

The transactions contemplated by this Agreement (i) are within the corporate powers of the MGA, (ii) have been duly authorized by all necessary corporate action of the MGA, (iii) constitute the legal, valid and binding obligation of the MGA, enforceable against it in accordance with its terms, and (iv) do not conflict with, result in a breach of any of the provisions of, or constitute a default under the provisions of any law, regulation, licensing requirement, charter provision, by-law or other instrument applicable to the MGA or its employees or to which the MGA is a party or may be bound.

b.

The MGA is licensed as an agent or producer, and if necessary, a managing general agent, in all jurisdictions where this Agreement applies.

c.

The MGA has the proper rights and interest in the business contemplated by this Agreement in order to place the business under this Agreement.

d.

The business being placed under this Agreement is not subject to another entity’s claim of interest, including, without limitation, a claim by contract or common law rights.

e.

In placing business under this Agreement, the MGA will not be in violation of any duty or obligation owed to another entity.

f.

The underwriting guidelines to be utilized by the MGA with respect to the Policies are now and will continue to be in conformity with the applicable statutes, regulations, rules, bulletins and opinions in the various jurisdictions where business under this Agreement will be conducted.